State authority backed by IAGR and NAGRA in regulator fight

IAGR and NAGRA back state authority as regulator coalition asks Supreme Court to rule

The filing arrived at the Supreme Court from an unusual direction. Not from a state attorney general defending tax revenue, not from a tribal gaming authority protecting sovereign territory, but from the International Association of Gaming Regulators and the North American Gaming Regulators Association — the professional bodies for the people whose entire function is to run licensing systems and keep problem gamblers out of them.

IAGR and NAGRA filed jointly, asking the Court to take up whether federal commodities law prevents states from regulating sports event contracts offered through federally registered exchanges. The trigger was the circuit split that has now hardened into something the lower courts cannot resolve on their own: the Ninth Circuit ruled that the Commodity Exchange Act does not preempt state gaming law; Illinois produced a reading that moved in the opposite direction. Two federal courts, the same statute, opposite conclusions.

What is unusual here is the filing's institutional character. State regulators fight these cases in their own courts, on their own dockets, using their own attorneys. When the professional associations decide the circuit split has become unworkable enough to warrant a coordinated Supreme Court petition, that is a signal about the underlying pressure on the regulatory apparatus itself — not just on any single state's enforcement position.

The CFTC is simultaneously pushing two proposed rules through the White House Office of Information and Regulatory Affairs: one that would define swaps to include event contracts, one that would exclude casino-style gambling products. Nicole Saharsky, representing Nevada, has already told the Ninth Circuit that neither rule changes the statutory text on which the court based its ruling. The Commodity Exchange Act says what it says. Regulatory definition-making operates within the statute, not above it, and the Ninth Circuit made clear it was reading the statute directly.

I have a bias toward downside scenarios in legal risk — I have noted it before and I am noting it again here, because it is relevant to how I read this. The consensus framing is that the CFTC rulemaking buys Kalshi time. I think that framing is doing more work than the facts support. Saharsky's point is precise: the court was already aware the CFTC planned to revise section 40.11 when it ruled. The revision was not a surprise that arrived after the decision. The court ruled anyway, on text. A revised rule published in the next two months does not reopen a ruling that explicitly set the rule aside as secondary.

The IAGR and NAGRA petition adds something that the individual state cases have not supplied: institutional standing, and a framing that is about regulatory function rather than state tax interest. Whether the Court reads that framing as a reason to grant certiorari or as further evidence that the political resolution should come from Congress is the open question. But the regulatory bodies filing together suggests the professional consensus among gaming regulators is that the current ambiguity is operationally unsustainable, and that they would rather have a Supreme Court loss on clear terms than continue operating inside a circuit split that produces different answers in different jurisdictions.